The Union Cabinet has approved India’s first paperless Budget 2021.

February 01, 2021

Finance Minister Nirmala Sitharaman has commenced the announcement of Union Budget 2021. The preparation of this Budget was taken in circumstances like never before, says Sitharaman as she begins her Budget speech. 

She further said that “We couldn’t have imagined the global slowdown during the last Budget. We announced the ‘Aatmanirbhar’ Package in May 2020 to sustain recovery. Atmanirbhar Bharat and Pradhan Mantri Yojana were like 3-4 mini Budgets in themselves.”

She highlights that total COVID-19 support measures amount to 13% of GDP. Adding she stated that total COVID-19 support measures by government and RBI totals to Rs 27.1 lakh cr.

FM says, “The budget proposals for 2021-22 rest on six pillars – health and wealth being; physical and financial capital and infrastructure; inclusive development for aspiration India; reinvigorating human capital, innovation and R&D; minimum government and maximum governance.”

This would be the second budget of Sitharaman and a very crucial one in times of Covid-19 pandemic. The Union Cabinet has approved India’s first paperless Budget 2021.

The Key Highlights of Union Budget 2021 are as follows:

The Budget outlay for HEALTH and WELLBEING is Rs2,23,846cr in 2021-22, increasing by 137% against Budget estimates of Rs94,452cr of 2020-21. 

1. “Investment in health infrastructure in this budget has increased substantially,” she added, focus on strengthening three areas – preventive, curative and wellbeing.

For the health system, the FM announces a new centrally sponsorship scheme called “PM Atmanirbhar Swasth Bharat Yojana”. The scheme will be launched with an outlay of Rs64,180cr for over 6 years. This will develop capacities of primary and secondary and territory care health systems. Further, it will strengthen national institutions and create new institutions. Also, the FM said the scheme will cater to detection and cure of new and emerging diseases.

Some of the features of the scheme are:

• Support for 17,788 rural and 11,024 urban health and wellness centres.
• To set up public health labs in all districts and 3,382 block public health units in 11 states.
• To establish critical care hospital blocks in 602 districts and 12 central institutions.
• Strengthening of the national centre for disease control, 20 metropolitan health surveillance units.
• Expansion of integrated health information portal to connect all public heath labs.
• Operationalisation of 17 new public health units and strengthening of 33 existing public health units.
• Units to be placed at 32 airports, 11 seaports and 7 land crossings.
• Setting up of 15 health emergency operation centres and 2 mobile hospitals.

2. FM to implement Jal Jeevan Mission with an outlay of Rs 2.87 lakh crore to cover houses. This is set to be implemented over the next five years. The scheme aims at a universal water supply in 4,378 urban local bodies with 2.86cr household tap connections.

3. FM announces to implement Urban Swachh Bharat Mission 2.0 with an allocation of Rs1,41,678cr for 5 years starting from 2021.

4. To tackle the burgeoning problem of air pollution, the FM proposes to provide an amount of Rs2,217cr for 42 urban centres.

5.FM announced a voluntary vehicle scrapping policy to face out old and unfit vehicles. She states that the policy will help in encouraging fuel efficiency, environment-friendly vehicles thereby reducing vehicular population and oil import bills.

FM said that vehicles will undergo fitness test which is 20 years for passengers and 15 years for commercial vehicles. Details of the scheme to be shared by the ministry separately. 

6. FM said pneumococcal vaccine presently limited to only 5 states. Soon to be rolled out across the country. Such will avert more than 50,000 child deaths annually.

FM provides Rs35,000cr for Covid-19 vaccine in the year 2021-22. 

PHYSICAL and FINANCIAL CAPITAL and INFRASTRUCTURE:

FM says, “Atmanirbharat-production linked incentive schemes are things, which I would like to place an emphasis.” She adds, “For a 5 trillion dollar economy, our manufacturing sector has to grow on double digits on a sustained basis.

“Our manufacturing companies need to become an integral part of Global Supply Chains,” FM adds.

1. FM states that PLI schemes to create manufacturing global champions announced in 13 sectors. Thereby, the government committed Rs1.97 lakh cr over five years starting this 2021-22. The initiative will help bring scale and size and key sectors. 

2. To enable the TEXTILE industry and make it globally competitive, the FM says attract large investments and boost economy generation.

For that, FM announced to launch Mega Investment Textiles Parks (MITRA) scheme in addition to the PLI scheme. 

To enable create global champions in exports, 7 textile parks will be established over 3 years. 

3. FM highlights that National Infrastructure Pipeline (NIP) is a specific target which government committed to achieving over the coming years. NIP which was launched with 6,835 projects, has now expanded to 7,400 projects. Further, around 217 projects worth Rs1.10 lakh cr under key infrastructure ministries have been completed.

FM says, “The NIP is a specific target which this government is committed to achieving over the coming years.” Adding she said, “The NIP will require a major increase in funding from both the government and the financial sector.”

In Budget 2021, FM proposes to take concrete steps to do this in three ways:

• Creating institutional structures.
• Big thrust on monetizing assets.
• Enhancing the share of Capital Expenditure in Central and State Budgets.

4. For infrastructure financing, the FM will introduce a bill for development financial institutions (DFI) and for capitalising the institution a sum of Rs20,000cr has been provided. Through the bill, the FM announced the ambition of having lending portfolio of Rs5 lakh cr for this DFI in three years.  

5. FM to enable debt financing of INVITs and REITs by foreign portfolio investors. Such will ease access of finance to InvITs and REITs and augmenting funds for infrastructure and real estate sectors.

6. FM to launch National Monetization Pipeline of potential brownfield infrastructure assets will be launched. Also, asset monetization dashboard will be created for tracking progress.

7. NHAI and PGCIP sponsored to attract international and domestic institutional investors.

8. Five operational roads with an estimated value of Rs5,000cr are being transferred. 

9. Transmission assets of Rs7,000cr to be transferred to PGCIL INVIT.

10. Railways will monetize dedicated freight corridor assets for operations and maintenance after commissioning.

11. Next lot of airports will be monetized for operations and management concessions.

12. Other core infrastructure assets will be rolled out under the asset monetization programs are:

• NHAI operational toll roads
• Two transmission assets of PGCIL.
• 3 Oil and gas pipelines of GAIL, Indian Oil and HPCL.
• AAI airports in tier II and III cities
• Other Railway infrastructure assets
• Warehouse assets of CPSEs
• Sports Stadium.

13. For road and highway infrastructure – more than 13,000 kilometre length of roads at a cost of Rs3.3 lakh cr already awarded under the Rs5.35 lakh cr Bharatmala Pariyojana project. FM says, by March 2022, the government will be awarding another 8,500 kilometres and complete an additional 11,000 national highway corridors.

To further augment road infrastructure, more economic corridors are also being planned. Some are:

• 3,500 kilometres of National Highway works in Tamil Nadu at an investment of Rs1.03 lakh cr. These include – Madurai-Kollam Corridor and Chittor-Thatchur Corridor and the construction will start next year.
• 1,100 kilometres of National Highway works in Kerala at an investment of Rs65,000cr including 600km sector of Mumbai-Kanya Kumari corridor
• 675 kilometre of highway works in West Bengal at a cost of Rs25,000cr including up-gradation of the existing road in Kolkata Siliguri.
• National highway works of Rs19,000cr are in progress in Assam, further works of more than Rs34,000cr covering 1,300 kilometers of highways will be undertaken in the state in coming 3 years.

FM also provides an outlay of Rs1,18,101cr for Ministry of Road and Highways. Of which Rs1,08,230cr is for Capital the highest ever. 

14. For Railway Infrastructure – Indian Railways have prepared National Rail plan for India 2030:

• Bringing down the logistic costs for the industry is at the core of a strategy to enable Make in India.
• Eastern and Western dedicated freight corridors will be commissioned by June 2022.
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Additional initiatives are also proposed:

• Sonnagar – Gomoh section of Eastern DFC will be taken up in PPP mode.
• To undertake future dedicated freight corridor projects namely the East Coast corridor.
• Broad gauge route kilometres electrified is expected to reach 46,000 RKM that is 72% by end of 2021 from 41,548 RKMs on October 01, 2020.
• 100% of electrification of broad gauge routes will be completed by December 2023.

For passenger convenience and safety, the following measures are introduced:

• A statically defined Vista dome LHB coach to give better travel experience to passengers.
• High-density network and highly utilized network routes of Indian Railways will be provided with an indigenously developed automatic train protection system.

A record sum of Rs1,10,055 cr for Railways has been provided of which Rs1,07,100cr is for CAPEX. 

15. Urban Infrastructure – A new scheme will be launched at a cost of Rs18,000cr to support augmentation of public bus transports. The scheme will facilitate the deployment of innovative PPP models. Also, the scheme will enable the private sector players to finance, to acquire, to operate and to maintain over 20,000 business.

Total of 702 kilometres of the conventional metro is operational, the FM said another 1,016 kilometres of metro and RRTS is under construction in 27 cities.

To new technologies namely Metro Light and Metro Neo will be deployed to provide metro railways at a much lesser cost with the same experience, convenience and safety in tier II cities and peripheral areas of Tier I cities.

• Central counterparts funding will be provided to Kochi Metro Railway phase 2 of 11.5 km at a cost of Rs1,957.05cr.
• Chennai Metro Railway Phase 2 of 118.9 km at a cost of Rs63,246cr will be provided.
• Bengaluru Railway Projects of Phase 2A and 2B of 58.19 km at a cost of Rs14,788cr.
• Nagpur Metro Rail project phase-II and Nashik Metro at a cost of Rs5,976cr and Rs2,092cr will be provided respectively.

16. For Power Infrastructure: The government has added 139 gigawatts of installed capacity. Connected additional 2.8cr households and added 1.41 lakh circuit km of transmission lines.

The framework will be put in place to give consumers alternatives to choose from  more than one distribution companies.

A revamped reforms-based result-linked power distribution sector scheme will be launched with an outlay of Rs3,05,984cr over 5 years. The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements.

To launch a Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.

17. Ports, Shipping, Waterways – Major Ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them. For the purpose, 7 projects worth more than Rs2,000cr will be offered by the Major Ports on Public Private Partnership mode in FY21-22.

A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. An amount of Rs1624cr will be provided over 5 years. This initiative will enable greater training and employment opportunities for Indian seafarers besides enhancing Indian companies share in global shipping.

Recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) will be doubled by 2024. This is expected to generate an additional 1.5 lakh jobs for our youth.

18. Petroleum & Natural Gas:

• Ujjwala Scheme which has benefited 8 crores households will be extended to cover 1 crores more beneficiaries.
• Will add 100 more districts in next 3 years to the City Gas Distribution network.
• A gas pipeline project will be taken up in Union Territory of Jammu & Kashmir.
• An independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

19. Financial Capital:

To consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.

To instil confidence amongst the participants in the Corporate Bond Market during times of stress and to generally enhance secondary market liquidity, it is proposed to create a permanent institutional framework. The proposed body would purchase investment-grade debt securities both in stressed and normal times and help in the development of the Bond market.

To introduce an investor charter as a right of all financial investors across all financial products.

In the budget of 2018-19, Government had announced its intent to establish a system of regulated gold exchanges in the country. For the purpose, SEBI will be notified as the regulator and Warehousing Development and Regulatory Authority will be strengthened to set up a commodity market ecosystem arrangement including vaulting, assaying, logistics etc in addition to warehousing.

To give a further boost to the non-conventional energy sector, I propose to provide an additional capital infusion of Rs1,000cr to Solar Energy Corporation of India and Rs1,500 crores to Indian Renewable Energy Development Agency.

20. FDI in the insurance sector:

To increase the permissible FDI limit from 49% to 74% in Insurance Companies and allow foreign ownership and control with safeguards. Under the new structure, the majority of Directors on the Board and key management persons would be resident Indians, with at least 50% of Directors being Independent Directors, and a specified percentage of profits being retained as a general reserve.

21. Stressed Asset Resolution by setting up a New Structure:

Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.

22. Recapitalization of PSBs: To further consolidate the financial capacity of PSBs, further recapitalization of Rs20,000cr is proposed in 2021-22.

23. FM proposes to revise the definition under the Companies Act, 2013 for Small Companies by increasing their thresholds for Paid up capital from “not exceeding Rs50 Lakh” to “not exceeding Rs2 Crore” and turnover from “not exceeding Rs2 Crore” to “not exceeding Rs20 Crore”.

24. During the coming fiscal 2021-22, we will be launching data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0. This Version 3.0 will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management, FM said. 

25. Disinvestment and Strategic Sale: FM announced an estimated Rs1,75,000cr as receipts from disinvestment in BE 2021-22.

26. Government Financial Reforms: To extend the TSA System for universal application form 2021-22.

To further streamline the ‘Ease of Doing Business’ for Cooperatives, FM proposes to set up a separate Administrative Structure for them. 

INCLUSIVE DEVELOPMENT FOR ASPIRATIONAL INDIA:

1. Agriculture:

• To provide adequate credit to our farmers, FM enhanced the agricultural credit target to Rs16.5 lakh cr in FY22.  The focus will be on ensuring increased credit flows to animal husbandry, dairy, and fisheries.
• FM announced to enhance the allocation to the Rural Infrastructure Development Fund from Rs30,000cr to Rs40,000cr. FM also doubles the Micro Irrigation Fund by another Rs5,000cr. 

2. Fisheries: FM proposes substantial investments in the development of modern fishing harbours and fish landing centres. To start with, 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as hubs of economic activity.

The government will also develop inland fishing harbours and fish-landing centres along the banks of rivers and waterways.

To promote seaweed cultivation, FM proposes a Multipurpose Seaweed Park to be established in Tamil Nadu. 

3. Migrant Workers and Labourers:  One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching about 69 crores beneficiaries – that’s a total of 86% beneficiaries covered. The remaining 4 states and UTs will be integrated in the next few months.

FM proposes to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers.

4. Financial Inclusion: To further facilitate credit flow under the scheme of Stand Up India for SCs, STs, and women, FM proposes to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture.

In this Budget, FM has provided Rs15,700cr to this sector, more than double of this year’s BE. 

REINVIGORATING HUMAN CAPITAL:

1. More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy. They shall emerge as exemplar schools in their regions, handholding and mentoring other schools to achieve the ideals of the Policy.

2. 100 new Sainik Schools will be set up in partnership with NGOs/ private schools/states.

3. FM stated that in Budget 2019-20, I had mentioned about the setting-up of Higher Education Commission of India. We would be introducing Legislation this year to implement the same. It will be an umbrella body having 4 separate vehicles for standard-setting, accreditation, regulation, and funding.

4. For accessible higher education in Ladakh, FM proposes to set up a Central University in Leh.

5. FM said, “We have set ourselves a target of establishing 750 Eklavya model residential schools in our tribal areas. I propose to increase the unit cost of each such school from Rs20cr to Rs38cr, and for hilly and difficult areas, to Rs48cr. This would help in creating robust infrastructure facilities for our tribal students.”

6. Revamping the Post Matric Scholarship Scheme, for the welfare of Scheduled Castes, the FM announced the allotment of Rs35,219cr for 6 years till 2025-2026, to benefit 4 crores SC students.

INNOVATION AND R&D:

1. There has been a manifold increase in digital payments in the recent past. To give a further boost to digital transactions, FM earmarks Rs1,500cr for a proposed scheme that will provide financial incentive to promote digital modes of payment.

2. FM announces to undertake a new initiative – National Language Translation Mission (NTLM). This will enable the wealth of governance-and-policy related knowledge on the Internet being made available in major Indian languages.

3. The New Space India Limited (NSIL), a PSU under the Department of Space will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.

4. To better understand this realm, the government will launch a Deep Ocean Mission with a budget outlay of more than Rs4,000cr, over five years. This Mission will cover deep ocean survey exploration and projects for the conservation of deep sea bio-diversity.

5. As part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia. The first unmanned launch is slated for December 2021.

MINIMUM GOVERNMENT, MAXIMUM GOVERNANCE:

1. To bring about transparency, efficiency and governance reforms in the nursing profession, The National Nursing and Midwifery Commission Bill will be introduced by the government for passing.

2. To have ease of doing business for those who deal with Government or CPSEs, and carry out contracts, FM proposes to set up a Conciliation Mechanism and mandate its use for quick resolution of contractual disputes. This will instil confidence in private investors and contractors.

3. The forthcoming Census could be the first digital census in the history of India. For this monumental and milestone-marking task, FM has allocated Rs3,768cr in the year 2021-2022.

4. FM proposed to provide Rs1,000 crores for the welfare of Tea workers especially women and their children in Assam and West Bengal. A special scheme will be devised for the same.

5. Fiscal Position:

For 2021-22, FM announced BE estimates for Capital Expenditure of in 2021-22 at Rs34.83 lakh cr. This includes Rs5.54 lakh cr which is 34.5% higher from the BE 2020-21.  The capital expenditure, estimated in RE is Rs4.39 lakh cr in 2020-2021 as against Rs4.12 lakh cr in BE 2020-21.

Over Rs44,000cr to be provided for projects, programmes, departments which will show good progress in CAPEX.

Further, over and above this expenditure, the Govt will provide Rs2 lakh cr to states and autonomous bodies for their CAPEX. FM says we will work on specific mechanisms to nudge states to spend more on the creation of infrastructure.

The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around Rs12 lakh cr.

Sitharaman said, “We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period. Adding she said, “We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land.”

Source:  India Infoline News Service